Written by: Collin Fitzgerald
Collin specializes in research capabilities, providing support for the Colliers Columbus Office, Industrial and Retail groups. He is responsible for executing data reports, maintaining a commercial property database, reporting quarterly trends, performing data analysis and utilizing statistical information to predict future behavior in the market. Keep reading for Collin's take on market trends in the Columbus office and industrial sectors.
Industrial Market Update
Columbus ended the year with a vacancy rate of 9.37%, its highest level in over a decade. This is primarily due to Big Lots vacating 3.8M SF, as well as many new projects sitting partially leased to completely vacant. Although vacancy rates are currently high, they are projected to decline in 2025, signaling renewed demand and a positive trajectory for the market.
Quarter in Review
The Columbus industrial market had negative net absorption this quarter, after having positive absorption in Q2 and Q3. The most significant reason behind the sizeable negative absorption was the 3.8 million square feet of space vacated by Big Lots due to bankruptcy. Without the Big Lots outlier, Q4 absorption would have been positive 847,977, along with positive 2M square feet for 2024. Along with absorption being drastically different, the vacancy rate without Big Lots would have been 8.30%, a percentage point lower. While still historically low, vacancy rates showed signs of creeping upward as speculative developments outpaced absorption rates. This year saw the lowest absorption in the past decade, but activity remains healthy with a positive outlook for 2025. Build-to-suits continue to be the main source of construction projects around Columbus. Project costs and interest rates remained high, leading most projects to postpone. This significant delivery slowdown and increasing tenant demand for well-located, high-quality spaces will lead to more stable market conditions through 2025. Rental rates, which had climbed steadily over the past decade, began to plateau in 2024 and ended the year at $6.74 per square foot. The influx of speculative capital that previously buoyed the market seemed to cool as investors became more cautious amid concerns about softening demand and the broader economy.
Forecast
Looking ahead to 2025, the Columbus industrial market is poised for continued growth. Demand is expected to remain strong, particularly in last-mile delivery and cold storage facilities, as consumer habits increasingly favor quick delivery times and fresh food distribution. The growing trend of reshoring and nearshoring manufacturing continues to drive demand for high-quality industrial space, as companies seek to leverage Columbus’ strategic location, skilled workforce, and exceptional transportation network, including access to major highways and intermodal hubs.
Absorption & Leasing
For Q4, the Columbus industrial market had 3.0 million square feet of negative absorption following 631,901 square feet of positive absorption in Q3. This quarter's negative absorption can be primarily attributed to Big Lots vacating 3.8 million square feet at 300-550 Phillipi Road. In addition, the next two biggest tenants to vacate space were Amazon, who vacated 514,490 square feet at 3538 Tradeport Court and Hyperion, who vacated 418,787 square feet at 5300 Crosswind Drive. Three other tenants occupying over 200,000 square feet also vacated their space this quarter. In contrast, eight tenants over 200,000 square feet occupied space this quarter. The most significant is DSV build-to-suite space for 1.2 million square feet and Tarkett, which occupied 610,479 square feet at the US 40 Gateway Logistics Center. While industrial vacancy is at a cyclical peak in Columbus, a pullback in deliveries and increased leasing volume point toward market stabilization heading into 2025, where we will most likely see more positive absorption.
Vacancy & Market Rents
Even without Big Lots vacating, the rise in speculative projects coming online and remaining unoccupied has further contributed to the increased vacancy rate. Since 2020, the average time to fully lease a newly constructed building above 100,000 square feet is 10.35 months. Lack of capital markets movement, and high construction costs have kept construction starts near an all-time low, which could, in turn, help stabilize the rise in vacancy. Direct asking rates showed a weighted rent of $6.74, while the market rents reflect a decrease compared to the previous quarter. Year-over-year rent is up 4.6%. The lower average asking rent is reflective of older buildings coming available with lower asking rents.
Sales Activity
The Columbus industrial market's sales volume remains at its lowest level in two years. However, sale prices per square foot have reached a two-year high, underscoring the sustained demand for well-located, modern industrial facilities, particularly those near major transport hubs. Sales volume totaled $172 million in the fourth quarter. However, half of this quarter's sales volume can be attributed to one portfolio sale of four properties. The largest sale was Ares REIT, which bought four properties from Becknell Industrial in the Southwest submarket for $92.85 million ($92.63 PSF). The other notable sale was 9885 Innovation Campus Way, a 351,000-square-foot building bought by Vitrian from Scannell Properties for $35.85 million ($102.14 PSF).
Check out the full Q4 2024 Industrial Trends report here!
Office Market Update
At the end of 2024, the office market vacancy dropped in Columbus compared to the rise in vacancy nationally. This was due to limited build-to-suit deliveries such as BBI Logistics and Advanced Drainage Systems, as well as owner-occupiers purchasing buildings. This created positive net absorption of 450,000 square feet in the fourth quarter.
Simultaneously, we are still seeing vacancy rates climb to near-record highs, surpassing 20% in several submarkets, as tenants continued to downsize or delay long-term leasing decisions. Class A office space, particularly those with modern amenities and central locations, fared better, but older and less adaptable buildings faced rising obsolescence. Landlords were pressured to offer aggressive concessions to attract or retain tenants, including rent reductions, extended free rent periods, and increased tenant improvement allowances.
Like trends in the national office market, average lease sizes on new deals are shrinking in Columbus as tenants relocate, consolidate, and renew on short-term deals, weighing on absorption trends. Developers also exercised caution, with no speculative office projects breaking ground and focusing instead on repositioning or repurposing older office stock. Investment activity in the office sector remained subdued, with buyers seeking deep discounts and sellers reluctant to accept significant write-downs on asset values.
Looking into 2025, the Columbus office market faces a challenging road ahead. Tenant demand is expected to rise as we see more companies start mandating back-to-work policies. There is an opportunity for growth in specific sectors, such as life sciences and technology, which may drive demand for specialized office facilities. While the office market's recovery will be slow and uneven, strategic reinvestment in key areas and adaptive reuse of underperforming properties could offer a path forward for landlords and investors willing to innovate. We anticipate lease terms and lease size to increase in 2025.
Absorption & Leasing
Stonehenge Financial Holdings signed a renewal, which was the most significant lease for 17,456 square feet at 191 W Nationwide Blvd in the CBD submarket. While leasing activity aligns with recent quarters, smaller average lease sizes keep the quarterly volume in Columbus below pre-pandemic levels. Over 150,000 square feet of new deals were signed this quarter, many with 2025 commencement dates. This demonstrates that there is still healthy leasing activity within the market. Renewals dominated the leasing landscape as companies opted to extend existing leases rather than relocate or expand. Suburban submarkets with access to parking and high-quality amenities outperformed the downtown core, where leasing activity slowed significantly.
Vacancy & Market Rents
Despite vacancy dropping this quarter and ongoing occupancy challenges in the office sector, vacancies in Columbus will likely continue to rise more gradually compared to the national market due to the strength and diversity of the Columbus economy and its projected growth. The construction pipeline is at the lowest level in over a decade, and no new projects are breaking ground amid elevated interest rates and uncertainty in future office demand. The overall vacancy rate in Columbus is 18.58%, with significant variations across different submarkets. Preleased space created a wave of positive absorption this quarter, which we do not expect to continue in 2025. Current direct asking rates equated to a weighted rent of $21.99 per square foot, which is $0.12 higher than last quarter.
Sales Activity
Sale activity in the Columbus office market remained muted in 2024, reflecting widespread investor caution. Rising interest rates and economic uncertainty made it difficult for buyers and sellers to align on pricing, leading to a significant slowdown in transaction volume. Properties that did trade often did so at a discount, particularly older office buildings with limited potential for repositioning. Investors preferred well-located Class A assets with strong tenant rosters, highly amenitized, and long-term leases, but even these properties faced greater scrutiny. Distressed sales began to emerge in the latter half of the year, as some owners faced challenges refinancing debt or maintaining occupancy levels and cash flows.
Check out the full Q4 2024 Office Trends report here!